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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






2. The difference between total revenue and total explicit costs






3. Models where firms are competitive rivals seeking to gain at the expense of their rivals






4. Ei > 1






5. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






6. The imbalance between limited productive resources and unlimited human wants






7. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






8. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






9. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






10. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






11. Ed > 1 - meaning consumers are price sensitive






12. The additional cost incurred from the consumption of the next unit of a good or a service






13. The most desirable alternative given up as the result of a decision






14. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






15. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






16. TR = P * Qd






17. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






18. Two goods are consumer substitutes if they provide essentially the same utility to consumers






19. Ed = (%dQd)/(%dP). Ignore negative sign






20. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






21. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






22. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






23. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






24. A good for which higher income decreases demand






25. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






26. Es = (%dQs) / (%dPrice)






27. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






28. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






29. Entry of new firms shifts the cost curves for all firms downward






30. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






31. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






32. Product demand - productivity - prices of other resources - and complementary resources






33. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






34. The additional benefit received from the consumption of the next unit of a good or service






35. A good for which higher income increases demand






36. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






37. The output where ATC is minimized and economic profit is zero






38. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






39. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






40. When firms focus their resources on production of goods for which they have comparative advantage






41. Costs that change with the level of output. If output is zero - so are TVCs.






42. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






43. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






44. AVC = TVC/Q






45. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






46. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






47. Ed = 0 - no response to price change






48. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






49. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






50. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity